1

WHY FEW ORGANIZATIONS ADOPT SYSTEMS THINKING

Russell L. Ackoff

I frequently talk to groups of managers on the nature of systems thinking and its

radical implications to management. In doing so I use several case studies involving

prominent American corporations. At the end of the presentation I am almost always

asked, "If this way of thinking is as good as you say it is, why don't more

organizations use it?"

It is easy to reply by saying that organizations naturally resist change. This of course

is a tautology. I once asked a vice president of marketing why consumers used his

product. He answered, "Because they like it." I then asked him how he knew this.

He answered, "Because the use it." Our answer to the question about failure of

organizations to adopt systems thinking is seldom any better then this.

There be many reasons why any particular organization fails to adopt systems

thinking but I believe there are two that are the most important, one general and one

specific. By a general reason I mean one that is responsible for organizations failing

to adopt any transforming idea, let alone systems thinking. By a specific reason I

mean one responsible for the failure to adopt systems thinking in particular. First,

consider the general explanation.

All through school, from kindergarten all the way through university, mistakes are

treated as bad things. We are downgraded for them. Furthermore, no effort is made

to determine whether we have learned anything from them. The grade given, not

learning from our mistakes, is a fait accompli

 2

When, on the completion of our schooling, we enter an employing organization,

which also makes it clear that mistakes are a bad thing and that they will be held

against us. Managers laugh when I tell them of an organization I once heard of that

offers an annual prize for the best mistake made last year. That mistake is defined as

the one from which they have learned most. When August Busch, III, was CEO of

the Anheuser-Busch Companies he once told his assembled vice presidents, "If

you didn't make a serious mistake last year you probably didn't do your job

because you didn’t try anything new. There is nothing wrong in making a mistake,

but if you ever make the same mistake twice you probably won't be here the next

year." He had it right: mistakes will be forgiven if we learn from them.

We cannot learn from doing anything right. We already know how to do it. Of

course we may get confirmation of what we already know and this has some value,

but it is not learning. We can learn from mistakes if we identify and correct them.

Therefore, organizations and individuals that never admit to a mistake never learn

anything. Organizations and individuals that always transfer responsibility for their

mistakes to others also avoid learning. One need look no further for an example than

to the executive office of my government.

THE GENERAL REASON

To understand why organizations do not use mistakes as opportunities for learning,

other than a disposition inherited from educational institutions, we must recognize that

there are two types of mistake: errors of commission and errors of omission. An

error of commission occurs when an organization or individual does something that

should not have been done. For example, when Kodak acquired Sterling Drugs it

made a very costly mistake. It had to be sold subsequently. Its sale involved a

considerable write-off.
 3

Robert F. Bruner, in his book, Deals from Hell (Wiley, 2005,New York) cites a

number of acquisitions that went sour in a big way. The Sony-Columbia merger in

1989 resulted in a $2.7 billion write-off. The acquisition of National Cash Register by

AT&T, cost AT&T $4.1 billion. His champion of errors of commision is the merger of

AOL and Time Warner. It resulted in a $200 billion loss in stock-market value and a

$54 billion write-down in the worth of the combination’s assets.

Bruner points out that in most such cases the executives responsible such losses

made significant gains in their own compensation. They were able to disclaim

responsibility for their mistakes.

An error of omission occurs when an individual or organization fails to do something

it should have done. For example, when Kodak failed to acquire Xerox when it

could have, or when Xerox failed to develop the small computer produced by its

employees. Of the two types of error, errors of omission are usually the more

important. The deterioration and failure of organizations are almost always due to

something they did not do.

Not to long ago IBM get into serious trouble because it ignored the reduction of the

size of computers. Fortunately, it eventually corrected this error but it came close to

going out of business. Kodak is currently in a precarious position because it did not

press the development of digital photography. General Motors and Ford are in

trouble because they have not innovated in ways that Toyota and Honda have.

Now for a key fact: accounting systems in the western world only take account of

errors of commission, the less important of the two types of error. They take no

account of errors of omission. Therefore, in an organization that frowns on mistakes

and in which only errors of commission are identified, a manager only has to be

concerned about doing something that should not have been done. Because errors
 4

of omission are not recorded they often go unacknowledged. If acknowledged,

accountability for them is seldom made explicit. In such a situation a manager who

wants invoke as little disapproval as possible must try either to minimize errors of

commission or transfer to others responsibility for those he or she makes.

The best way to do this is to do nothing, or as little as one can get away with. This is
a major reason that organizations do not make radical changes.

A number of years ago when I was working on a project for a major automotive

manufacturing company, the Executive Vice President asked me if I would give a

two-day course on systems thinking to the company’s top 200 managers and

executives. I was delighted. He said he wanted to restrict classes to 20 so that

there would be plenty of discussion. He had the following plan: four sessions of

junior vice presidents, three of intermediate level vice presidents, two of senior vice

presidents, and finally one of the executive office. The sessions were to be conduct

from the lower level up.

At the end of the first session to junior vice presidents one said, "This stuff is great. I

would love to use it but you are talking to the wrong people. I can't introduce it

without the approval of my boss. Are you going to get a chance to present it to

him?" I told I would in one of the later courses. He assured me he would hit his

boss for approval as he came out of his session. In each of the first four sessions of

junior vice presidents the same issue was raised.

In the first group on the second tier, with intermediate level vice presidents, the same

issue was raised. I was told they also wanted to introduce systems thinking but

could not do so without their bosses’ approval. Again I told them their bosses

would eventually be exposed to the same ideas. In each of the three sessions at

this level the same issue was raised.

 5

In the two sessions involving senior vice presidents the same issue was raised.

They asked if I would have a chance to present the material to the CEO and his

executive committee. I said I would. I could hardly wait to hear what the CEO would

say.

At the end of the session which he attended he said, "This stuff is great. I would love

to use it. But I can't do it with the approval and support of my subordinates. Are

you going to get a chance to present it to them?" This was a typical organization,

one in which the principal operating principle was "Cover your ass.” Application of

this principle produced a management that tried to minimize its responsibility and

accountability. The result was a paralyzed organization, one that almost never

initiated change of any kind let alone innovation. It made changes only when a

competitor made it necessary for it to do so.

This deficiency in organizations can be eliminated by taking the following steps.

1. Record every decision of importance, whether to do something or not. The

Decision Record should include (a) the expected effects of the decision and by
when they are expected, (b) the assumptions on which the expectations are based,

(c) the inputs to the decision (information, knowledge and understanding), and (d)

how the decision was made and by whom.

2. Monitor the decisions to detect any deviation of fact from expectations and

assumptions. When a deviation is found, determine its cause and take corrective

action.

3. The choice of a corrective action is itself a decision and should be treated in

the same way as the original decision, a Decision Record should be

prepared for it. In this way one can learn how to correct mistakes; that is, learn
 6

how to learn more rapidly and effectively. Learning how to learn is probably
the most important thing an organization or individual can learn.

4. The decision by an organization not to adopt systems thinking should be

treated in this way. Making explicit the assumptions on which such a decision

is based and monitoring them can lead to a reversal of the decision in time.

THE SPECIFIC REASON

Very few managers have any knowledge or understanding of systems thinking, and

for good reason. Very little of our literature and lectures are addressed to potential

users. I very seldom come across an organizational decision maker who has had any

previous exposure to systems thinking.

We are an introverted profession. We do most of our writing and speaking to each

other. This is apparent on examination of the content of any of our journals or

conferences. To be sure, some communication among ourselves is necessary, but

it is not sufficient.

Until we communicate to our potential users in a language they can understand, they

and we will not understand what we are talking about. If Einstein could do it with

relativity theory, we should be able to do it with systems thinking (Einstein and

Infeld, 1951). It is easy to hide the ambiguity and vagueness in our own thinking

behind jargon, but almost impossible to do so when speaking or writing in ordinary

language.

We have developed a vocabulary that equips our students with the ability to speak

with authority about subjects they do not understand. Little wonder they do not

become effective spokespersons to potential users.

 7

This society should publish a journal addressed to potential users. It should have

managers on its editorial board. It should invite dialog with potential users either

electronically or in print. In addition, it should occasionally hold conferences that

provide a bridge between system thinkers and their potential users. These

conferences should reveal what are we doing and can do that they should know

about?

Furthermore, the articles published in our usual journals should be required to answer

the “so what” question at the end of each submission. The answer to this question

should be an explicit statement of how the author intends to affect the behavior or

thinking of the reader. No article should be published without such an appendage.

Let’s start to think outside the box into which we have painted ourselves!

REFERENCES

Bruner, Robert, Deals from Hell. Wiley. New York: 2005.

Einstein, Albert and Leopold Infeld, The Evolution of Physics. New York: Simon and

Schuster, 1951.

Russell L. Ackoff

1021 Lancaster Ave., #201

Bryn Mawr, PA 19010 USA

e-mail: RLAckoff@aol.com